The contemporary economic policies of IDB member countries envisage a
significant role for the private sector in their economic development. As a measure of its
contribution to development, the private sector is estimated to share more than 60% of the
Gross Domestic Fixed Capital Formation in IDB member countries.
In terms of size, the private sector in IDB member countries varies from
the micro and small-scale, which primarily belongs to the informal sector, to medium and
large-scale enterprises. At the country level, there are considerable differences in the
characteristics of private sectors in various member countries. At one end, there are
well-established, dynamic private sectors characterized by a diversified structure of
enterprises of all sizes and growing capital markets. And at the other end, there are the
growing private sectors characterized by small-scale businesses concentrated in the
informal and agricultural sectors, together with a handful of foreign-owned entities.
On a broader scale, looking at the overall proportionate share of the
private sector in Gross Domestic Fixed Capital Formation for the whole world, it increased
from 74.7% in 1980 to 76.9% in 1997.
In the light of these trends, governments in developing countries have
sought to expand their private sectors with a view to benefit from the tangible gains of
globalization. Similarly, many IDB member countries have adopted broad policy reforms in
the areas of liberalization of prices, removal of exchange controls and trade
restrictions, and rationalization of government tariffs, thereby creating a more favorable
environment for private sector investment.